Suncor Energy (TSX: SU) is one of Canada’s largest integrated energy companies. It primarily focuses on oil sand production, refining, and retail operations. Over the past three years, fluctuations in oil prices, economic conditions, and energy sector developments have influenced the company’s stock price.
Let’s dive into where Suncor could be headed over the medium term.
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Current performance and market trends
As of early 2025, Suncor Energy’s stock has demonstrated resilience, benefiting from stable oil prices and improved operational efficiency. The company has reported strong earnings driven by higher production volumes and optimized refining margins. Its dividend yield and share buyback programs continue to make it an attractive choice for income-focused investors.
In recent quarters, the upstream production of Suncor reached nearly 875,000 barrels per day (bpd), with refining throughput at 486,000 bpd. These figures indicate that the company capitalizes on favourable oil market conditions, ensuring steady cash flow and profitability.
Oil price fluctuations will remain a primary driver of Suncor’s stock performance. The price of crude oil is affected by geopolitical events, OPEC+ production decisions, and global economic growth. Analysts project that oil prices will remain in the $75–$90 per barrel range over the next few years, which can support steady revenue growth for Suncor.
In addition, global energy demand is expected to remain robust, particularly in emerging markets. Despite the ongoing shift toward renewable energy, oil and gas will still play a significant role in meeting global energy needs.
Growth and operational efficiency
Suncor has been investing in optimizing its operations, focusing on cost reduction and efficiency improvements. Completing major infrastructure projects, such as the Trans Mountain Pipeline expansion, can enhance Suncor’s market access and reduce transportation costs, making its oil more competitive. If Suncor continues to execute its strategy effectively, it could further boost its financial performance and stock value.
Suncor has maintained a strong balance sheet, recently achieving its net debt target of C$8 billion ahead of schedule. The company has also committed to returning a significant portion of its free cash flow to shareholders through dividends and share repurchases. If Suncor continues its aggressive share buyback program and increases dividends, investor confidence will likely remain high, further supporting stock price appreciation.
So, is Suncor a buy right now?
For long-term investors, Suncor presents a compelling case. The company has a strong track record of navigating industry cycles and rewarding shareholders through dividends and buybacks. Its integrated business model provides stability, balancing the volatility of oil prices with refining and retail operations.
While there are risks, such as regulatory uncertainties and the transition to renewable energy, Suncor’s ability to adapt and innovate could sustain its growth trajectory. Investors seeking exposure to the energy sector may find Suncor to be a valuable addition to their portfolio, mainly if they believe in the resilience of the oil and gas industry.
Overall, I think Suncor could trend a lot higher over the next three years. Though such a view does rely on energy prices staying relatively robust over this timeframe. That’s a factor that’s hard to gauge, and it’s one of the reasons why this stock has bounced around so much.
That said, I’d target a share price that’s 30% or so higher from here over the next three years, exclusive of dividends. This is a stock that’s rewarded patient investors in the past, and I don’t think that fact is going to change anytime soon.
